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MUSD is the native stablecoin of the Mezo ecosystem, issued by Thesis — the blockchain venture studio behind the Mezo Bitcoin Layer-2 network. MUSD is Mezo’s 100% Bitcoin-backed stablecoin, designed to maintain a consistent value of 1:1 with the US dollar while enabling users to tap into dollar liquidity without divesting their Bitcoin holdings. The protocol is built on top of the tBTC bridge, a decentralized tokenized version of Bitcoin produced by the Threshold Network, operating since 2020 with public audits and proof-of-reserves.
MUSD launched alongside the Mezo Mainnet on May 28, 2025, following extensive audits by Quantstamp and Thesis Defense, over $400 million in total deposits, $2 billion in MUSD borrowed on testnet, and 2,000,000+ testnet transactions.
MUSD uses a CDP (collateralized debt position) model. Every outstanding MUSD is redeemable for Bitcoin, with $1 in BTC collateral used to mint 1 MUSD. This mint-and-redeem model keeps MUSD pegged to $1 even in volatile markets: when MUSD trades below $1, arbitrageurs buy discounted MUSD and redeem it for $1 of underlying BTC; when it trades above $1, arbitrageurs mint new MUSD by supplying BTC and sell it on the market until the peg is restored. To ensure the peg holds during volatility, all loan positions must maintain a collateral ratio above 110%, with built-in liquidation mechanisms and a stability pool to enforce this. Unlike traditional two-sided lending protocols, MUSD is minted directly from Bitcoin collateral, allowing liquidity to grow organically as more users deposit BTC. Fixed borrowing rates as low as 1% are locked in for the life of the loan.
